• Need for calm reflection on what’s right longer term for pension savers
In the meantime, and until we formally leave the EU, the FCA has reminded firms they must continue to comply with all regulations, including those which originate in the EU. Going further, it has advised firms that they must continue with plans to implement forthcoming EU regulatory changes.
The UK Government also has a number of significant financial services proposals underway, including the Treasury’s plans for a Lifetime ISA and a secondary annuity market. But unless some key aspects can be finalised very soon, there is a real risk that an April 2017 implementation will no longer be feasible. And there’s a risk that the Pension Bill to introduce new master trust rules could be derailed.
Steven Cameron, Pensions Director at Aegon, says: “Until we officially exit the EU, the FCA has reminded firms to continue to follow regulations arising from the EU. Many of these are part of UK regulation and so will continue to apply unless and until the UK Government decides to change them.
“But we are also facing a raft of new EU regulations, many of which are due to be implemented over the next two years or so*. While the FCA has indicated firms should continue to implement these too, we would urge a thorough examination of whether each individual proposed change adds value for UK savers long term. Some may be needed as part of new trade agreements but others may tie up time and resources which might be better spent on longer-lasting initiatives.
“We’d also urge the Government to give an early indication of its plans to take forward initiatives such as the Lifetime ISA and the secondary annuity market. Unless we get more detail very soon, the April 2017 introduction looks very challenging. There could also be a question mark over the Pensions Bill announced in the Queen’s Speech to review master trust rules.
“It is likely the Government will wait until the autumn before considering if tough decisions are required in response to any impact on economic performance, with the state pension triple lock highlighted pre Referendum as at risk. While domestic policy changes ahead of EU exit are a real possibility, we’d urge a truly long-term perspective in areas such as pensions.
We’d also caution against any radical changes such as a major overhaul of pension tax relief, which would run contrary to the wider desire to offer stability where possible.
“As we all work to achieve an orderly transition to UK outside the EU, it’s important that industry works closely with both FCA and Government for the benefit of our customers.”
*This includes Packaged Retail Insurance Based Investment Products (PRIIPs) regulations, changes to the Markets in Financial Instruments Directive (MiFID) and to the Insurance Distribution Directive (IDD).
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